China’s crude steel output hit an all-time high on a daily rate basis in September at 3.085 million mt/day, which annualizes to 1,126 million mt, S&P Global Platts calculated based on National Bureau of Statistics data released Oct. 19.
Based on Platts’ estimated crude steel capacity in China of 1,230 million mt/year in 2020, the utilization rate was 92% in September, up from 91% in August.
China produced 92.56 million mt of crude steel and 75.78 million mt of pig iron in September, up 10.9% and 6.9% year on year respectively, the NBS data released Oct. 19 showed. The crude steel daily average was up 0.8% month on month, while pig iron was down 0.3% over the same period.
Over January-September, China’s crude steel and pig iron output increased by 4.5% and 3.8% year on year respectively to 781.59 million mt and 665.48 million mt.
The disparity between the crude steel and pig iron growth rates in September was due mainly to soaring iron ore prices forcing mills to consume more scrap instead of hot metal in the steelmaking process, some market sources said.
Platts IODEX 62% iron ore index touched $130.80/dmt CFR China Sept. 3, its highest since January 2014.
However, China’s record high steel production in September encountered slow demand in the major steel consumption sectors of infrastructure and property, prompting a fall in steel prices through the month.
Fixed asset investment, or FAI, in infrastructure rose 3% year on year in September, decelerating from 4% year-on-year growth in August, Platts calculated from NBS data. Property new starts fell 2% year on year in the month, down from 2.4% year-on-year growth in August.
Over January-September, infrastructure FAI edged up 0.2% year on year, while property new starts were down 3.4%. The growth rates in the infrastructure and property sectors, which account for more than 55% of China’s total steel consumption, were behind the 4.5% year-on-year growth in China’s crude steel output in the first nine months of 2020.
Some market sources had earlier expected soaring long steel inventories to persist through 2020 and even into 2021, but infrastructure construction has accelerated in October due to an increase in government funding, which could offset downward pressure from rising steel inventories in the coming months, some sources said.
The profit margin for Chinese domestic hot-rolled coil sales, an indicator of flat steel performance, averaged $27/mt in September, outpacing rebar, which reflects long steel markets, at $20/mt.
China’s crude steel output slowed slightly at the start of October. The China Iron & Steel Association estimated the country’s total crude steel production over Oct. 1-10 at 3.07 million mt/day, down 0.52% from Sept. 20-30 but still up 19.99% year on year.
CISA member steelworks accounted for 2.17 million mt/day of the total over Oct. 1-10, edging down 0.84% from Sept. 20-30 and 14.9% higher than a year earlier.
Post time: Oct-27-2020